Rupert Murdoch’s grilling has a nation transfixed, Karen Kissane reports from London.

It is not often Rupert Murdoch is backed into a corner, but it happened this week at the Leveson inquiry into press standards.
He was being questioned about a story in the News of the World, the Sunday tabloid he closed last year over the phone-hacking scandal. The then-formula one chief Max Mosley once sued the paper over an article that claimed he had taken part in a Nazi-themed orgy. Mosley contended that the orgy had no Nazi theme. In 2008 the High Court ruled he was right and awarded him damages.
Murdoch was questioned about a related issue, the paper’s posting on its website of a video of the sexual encounter. In his judgment of the case, Justice Eady wrote that the newspaper had offered to pixilate the face of one of the women in the video, and to pay her money, if she would give an interview about the incident. She was told that if she refused, her privacy would not be protected. Justice Eady said this amounted to blackmail.
Did Murdoch think his journalists had committed blackmail?
Murdoch replied, “A journalist doing a favour for someone in return for a favour back is pretty much everyday practice.”
Justice Brian Leveson pressed him, saying he found it disturbing that a woman whose actions did not touch on the public interest would be treated that way.
Murdoch insisted, “It’s a common thing in life, not just in journalism, for people to say, ‘You scratch my back and I will scratch your back … “‘
Leveson asked him to read the Mosley judgment and to make a submission about his view on the blackmail claim. Murdoch agreed.
And then, to double his trouble, lead counsel Robert Jay, QC, took the opening to ask Murdoch whether back-scratching was a part of his dealings with politicians. But on this issue of political influence Murdoch was adamant that his hands were clean, a stance he upheld all through his day and a half of questioning: “I don’t ask any politician to scratch my back.” He had never asked a prime minister for anything, he maintained.
Jay put it to him that he would never have been so “cack-handed” as to ask directly for anything; that perhaps politicians worked out what he wanted and gave it to him.
“Whether Rupert ever asked for anything or got anything is only one question,” the media analyst Steve Hewlett later told the BBC. He said Jay did “out” Murdoch on a number of issues: among them, influencing Tony Blair over the euro and buying The Times and The Sunday Times without the sale being referred to Britain’s Competition Commission.
“Once politicians believe he is essential to electability, and that’s been the case since [prime minister Margaret] Thatcher, the process is corrupted,” Hewlett said. “It’s not only what did they do in return but what didn’t they do for fear of Rupert Murdoch and his newspapers.”
Hewlett argued that the issue was not Murdoch lobbying for his commercial interests, or allowing his political interests to shape the content of his newspapers; all proprietors did that. “The problem was that he was 40 per cent of the market and way, way over-mighty. There wasn’t anything of significance that didn’t involve, ‘What did Rupert make of this?’ … for the last 30 years.”
But the appearances of James and Rupert Murdoch this week are about much more than an analysis of where the British media have gone wrong. This was the second time that Murdoch, one of the world’s richest and most powerful men, agreed to be publicly interrogated. The first time was when he appeared last year before a committee of British MPs over phone-hacking.
The Leveson inquiry asked him about phone-hacking, too, but its main focus was his relationships with politicians. He would have agreed to appear at least partly because it was in the interests of his company, News Corp, that he eat this particular humble pie with a semblance of good grace.
Because underneath all the claims and counter-claims about hacking and bribery, cover-ups and failures in corporate governance, simmers a potentially deadly question: are the Murdochs and their companies fit and proper to be holding the positions they do?
The answer to this could prove expensive, on both sides of the Atlantic.
The same day Rupert Murdoch gave evidence, news broke that Britain’s media regulator, Ofcom, had asked News Group newspapers for more documents disclosed in the civil cases related to phone-hacking. This was the first confirmation that the malpractices at News of the World were important to Ofcom’s investigation into whether BSkyB is fit and proper to hold a broadcasting licence.
Worst-case scenario for the Murdochs: News Corp could be forced to reduce its 39 per cent share in BSkyB so that it would no longer be seen as having a material influence over the broadcaster.
Ofcom might also be watching with interest the 46 arrests from the two police investigations related to News-related scandals (one into phone-hacking and one into bribery of officials), as well as the work of the parliamentary select committee on the media, which is due to release its report into the phone-hacking scandal next week.
The British scandals are reverberating in the US, too. Last year, the FBI launched an investigation into News Corp after a report that employees might have attempted to hack phone conversations and voicemails of survivors of the September 11 attacks.
Separately, US authorities are considering action against News Corp under the Foreign Corrupt Practices Act, legislation that allows prosecution of US firms which might have bribed foreign officials. This would relate to the claims by British police that The Sun newspaper had “a culture of illegal payments” to “a network of corrupted officials” – including police.
Worst-case scenario for the Murdochs: a US court case, with a guilty verdict leading to hundreds of millions of dollars in fines.
James Murdoch has claimed he knew nothing of the extent of the phone-hacking scandal at the time the company denied it went beyond a single reporter. This week, Rupert Murdoch admitted there had been a cover-up but pointed the finger at an editor, believed to be Colin Myler, and a “smart lawyer”, believed to be News International’s former head of legal affairs, Tom Crone.
A furious Crone denied this charge as a “shameful lie”. He pointed out it was “perhaps no coincidence” that the two people Murdoch named as involved in a cover-up also happened to be the same two people who had said his son’s evidence to the parliamentary select committee last year was inaccurate.
Crone and Myler told the committee they had warned James of evidence that hacking was widespread, and he had understood what it meant. James is adamant he was not told.
Meanwhile, Britain is transfixed by the political fallout from this week’s hearings. During James’s evidence it was revealed the special adviser to the Culture Secretary, Jeremy Hunt, kept the Murdochs briefed daily on Hunt’s thinking about last year’s News Corp bid for a full takeover of BSkyB. This continued during the months Hunt was meant to be acting impartially, in a quasi-judicial role, supervising the process.
The special adviser, Adam Smith, has now walked the plank, apologising for having “gone too far” in briefing News Corp, but Labour is baying for the minister’s blood.
The Opposition Leader, Ed Miliband, said the idea Smith had acted as a “lone wolf” beggared belief. The phone-hacking Hydra continues to grow more heads.

First published in The Sydney Morning Herald.